the recent escalation of the risk premium a new milestone is scored by exceeding 100 basic points. The differential between the return that investors demand from Spanish bonds to ten years against the Germans it was not so wide since June 2020. The search for investor refuge in the face of the uncertainty coming from Ukraine and the determination of the central banks to raise rates give rise to this fattening.
Exactly ten days ago, the Spanish one-decade bond exceeded rates of 1% for the first time in the last 33 months. A level that, then, translated into a risk premium of 80 basis points. In some bars of trading in the secondary debt market this Monday, spreads of more than 105 points were even reached.
Despite this rise in the risk premium, the same did not happen in the yield of the bonds, which relaxed this Monday due to the return of investor money to sovereign bonds. Thus, the performance required of Spanish paper stood at around 1.23%.
Rise in peripherals
Nevertheless, easing was much larger in German bunds, perceived as the refuge par excellence in the European fixed income market. Thus, they even reached rates below 0.2% in some bars of the session. A divergence that resulted in more pressure for the papers of the Eurozone economies considered peripheral.
In this scenario, the ten-year bonds issued by Italy marked a yield of 1.9%. A level that implies a spread of 170 basis points with the ‘bund’ and almost 70 points against the Spanish debt at the same term.
In the case of the papers issued by Portugal, the interest stood at 1.11% this Monday, which gave rise to a gap of almost 90 points against the German ‘bund’. Meanwhile, the profitability of greek bonds at ten years it exceeded 2.6%, with a premium that was increasingly closer to 240 basis points.
A week ago, the President of the European Central Bank (ECB), Christine Lagarde, explained to the Economic Affairs Committee of the European Parliament will not precipitate premature hardening of monetary policy. In addition, he assured that he will use all the instruments at his disposal to prevent risk premiums from skyrocketingas happened during the debt crisis between 2010 and 2012.